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One Year On, It’s Easy to Find Cannabis in Nevada—Maybe Too Easy

In this April 16, 2018, file photo, people stand outside after shopping at the Essence cannabis dispensary in Las Vegas. Nevada's marijuana regulators say they are trying to keep up with demands at recreational dispensaries, where sales continue to outpace projections. The Nevada Appeal reports the Interim Finance Committee approved an additional $1.5 million for the Department of Taxation to hire more security guards and staff to process background checks for workers at marijuana facilities. (John Locher/AP)

One year after the first retail cannabis stores opened in Nevada, the state’s dispensaries are on pace to sell more than $400 million in cannabis products through their first 12 months of adult-use operations. The state tax department has taken in nearly $50 million in revenue through the first nine months, and only one retail store has been subject to disciplinary action.

The only bad news comes in the area of unlicensed sales. Police officials estimate the illicit cannabis market in Las Vegas has tripled since licensed retailers opened their doors last July 1.

Pop-Up Markets Thriving

Las Vegas Metropolitan Police Sgt. Randy Dockery said instead of selling illegally at popular cannabis festivals in Southern Nevada like the annual High Times Cannabis Cup or Las Vegas Hemp Fest, more unlicensed sellers are now hosting “pop-up markets” in rented warehouses and banquet facilities. The marketplaces, which can feature up to 25 vendors selling everything from cannabis flower to potato chips, often take place on weekends, lasting just a few hours before vendors count their earnings and head home.

Illicit vendors can “easily fool” some of the 42 million annual tourists to Las Vegas, Dockery said. They present themselves as legal retailers, passing out business cards in popular visitor areas like the Las Vegas Strip and Fremont Street. And many such tourists are fooled, thinking marijuana is legal no matter where they buy it.

... buying it isn’t illegal, as long as it’s less than an ounce.

Sgt. Randy Dockery, Las Vegas Metro Police

“Actually, buying it isn’t illegal, as long as it’s less than an ounce,” Dockery said. “The people selling the plant are the ones committing the crime, and they’re well aware that what they’re doing is illegal.”

Dockery said the oversaturation of marijuana flower in California has prompted many vendors, who come from out of state, to leave behind pounds of the plant after their pop-up sales end. He said anywhere from two to five such pop-up markets occur in a given weekend across the Las Vegas Valley.

Otherwise Things Are Good

Despite the challenges with the illicit market, Nevada officials and state license holders say the industry has been otherwise successful.

The state recorded $304.7 million in sales for the first nine months of adult-use sales. Collections from a 15 percent state wholesale tax on marijuana shipments from cultivators and production facilities to dispensaries, as well as a 10 percent excise tax on recreational marijuana sales generated 97 percent of 12-month estimates through just nine months of sales, according to most recent data available from the Nevada Department of Taxation. When final tax tallies for the first year are released in September, state officials say the 12-month tax figures could exceed initial projections of just over $50 million by as much as 45 percent. That would equate to nearly $6 million raised in marijuana taxes per month, compared to about $4.2 million estimated last year by the economic office of Nevada Gov. Brian Sandoval.

Only one of the 61 open dispensaries in Nevada have been subject to discipline from the Nevada Department of Taxation, as well as two of the state’s 115 operating cultivators and four of its nine laboratory testing facilities. All of those facilities, which temporarily had their state licenses suspended, are again open for business.

A customer shops at The Source dispensary in Las Vegas, which competes with a robust black market. (AP Photo/John Locher, File)

A taxation department survey of dispensary owners statewide said about half of all marijuana sales are on flower. Concentrates make up 25 percent of sales, while edibles account for just under 13 percent of products purchased by recreational buyers. Pre-rolls accounted for 10 percent, and the final three percent of sales came from medical products like suppositories and tinctures. As many as 8,500 jobs have been created by Nevada’s legal cannabis industry between both recreational and medicinal marijuana, and over $300 million has been invested by weed companies in Nevada real estate, according to numbers from the Nevada Dispensary Association.

NDA Executive Director Riana Durrett said for Nevada’s cannabis industry to continue improving in the next 12 months, “stabilization” and supplanting the black market are its top two priorities.

Chris Kudialis is a reporter for the Las Vegas Sun. He has written articles for the Los Angeles Times, Charlotte Observer, Houston Chronicle, Detroit Free Press and Brazil's Rio Times, among other metropolitan dailies.

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